The Ford Motor Company world headquarters in Dearborn, Michigan. | Bill Pugliano/Getty Images
Local economic developers, business leaders and some state lawmakers are freaking out over plans by home team player Ford Motor Co. to make the biggest manufacturing investments in its history in Kentucky and Tennessee.
Unless you’ve been locked inside a Tesla with a dead battery for the past month, you’re no doubt aware that Ford has announced it’s going to spend $11.4 billion to build two battery plants in Kentucky, and a battery plant and electric pickup truck assembly plant in Tennessee.
Ford expects to create 11,000 new jobs in those plants. The Tennessee complex will be known as BlueOval City, located on a six-square-mile site that the state has spent $175 million assembling over the past decade in hopes of landing such a project.
“Like the iconic Rouge complex in Michigan did a century earlier, BlueOval City will usher in a new era for American manufacturing,” Ford said in a news release announcing the project.
Some Michigan leaders felt like they’d been run over by a Ford F-150 pickup upon hearing the news.
Sen. Ken Horn (R-Frankenmuth) described it to me as a “gut punch” that threatens Michigan’s century-long auto industry dominance.
He and many local economic developers are calling on Michigan to substantially boost tax and other business attraction incentives to become more competitive in vying for electric vehicle investments.
But the debate over boosting incentives to chase new auto plants ignores Michigan’s bigger challenge in remaining king of the automotive hill: retaining and growing the intellectual heartbeat of the industry.
Michigan companies provide 68% of the $15 billion in annual U.S. business-funded automotive research-and-development spending, according to MICHauto.
Michigan’s ability to hold its commanding share of the research, design, engineering, finance, management and marketing jobs will determine Michigan’s automotive path. Or if there will be one.
“That’s where the future growth is,” said Glenn Stevens, executive director of MICHauto, which researches and promotes Michigan’s signature industry.
Stevens is quick to point out that Michigan also needs good-paying, UAW-represented jobs its 13 automotive assembly and components plants provide.
Those jobs contribute to a vibrant mobility ecosystem that employs 20% of Michigan’s workforce, according to MICHauto research.
But production jobs in Michigan auto plants have been declining for decades, despite billions of dollars in tax and other government incentives spent to attract factory jobs. Michigan has about 38,000 auto manufacturing jobs, down 60% since 1990, as this astonishing chart from the St. Louis Federal Reserve Bank illustrates.
And wages in auto production jobs are falling. Adjusted for inflation, earnings in motor vehicle and parts plants fell 17.1% between 1990 and 2018, according to a Bureau of Labor Statistics study.
That compares to a 17.9% increase in inflation-adjusted earnings for total private-sector jobs in the same period.
Tens of thousands more auto factory jobs are at risk as automakers rapidly shift to electric vehicles that don’t require piston-driven engines, transmissions and other components.
Meanwhile, automakers are hiring thousands of highly educated software engineers and other knowledge workers they need in a historic transformation of the auto industry.
“I don’t think there’s been any kind of an upheaval like this in my career,” said Kristin Dziczek, the veteran vice president of research at the Center for Automotive Research in Ann Arbor.
Last year, General Motors announced that it would hire 3,000 engineers, designers and information technology specialists in its bid to become a software company that also makes cars.
GM already has more salaried workers than hourly workers in the United States; 48,000 salaried employees and 46,000 hourly workers, according to the automaker’s latest annual report.
Keeping auto knowledge jobs in Michigan is key to ensuring that the state’s auto plants building gas-powered cars and trucks are converted to produce electric vehicles.
Dziczek cited the former cavernous GM Detroit-Hamtramck assembly plant as an example. GM announced it would close the plant in 2019, but then decided to invest $2 billion to overhaul it as the automaker’s first dedicated electric vehicle plant.
Pressure by the UAW to transform the plant to electric vehicle production was crucial to its revival. Known as Factory ZERO, the plant will soon begin churning out Hummer SUVs.
“Factory ZERO’s proximity to GM’s knowledge workforce is really important,” Dziczek said. “They go hand in hand.”
But Michigan has some serious shortcomings in keeping and attracting knowledge workers who want to live in states with vibrant communities and a good quality of life.
Stevens points out that Michigan has a few of those, including Grand Rapids, Ann Arbor and parts of metro Detroit.
But the state is too often known nationally for places like Flint and Benton Harbor where drinking water is tainted with lead, and for losers charged with plotting to kidnap and possibly kill Gov. Gretchen Whitmer over her efforts to protect public health in the deadly COVID epidemic.
State economic development policy is focused on business climate issues and training workers for skilled trades jobs. Those things are not unimportant.
But little attention is given to boosting Michigan’s middling proportion of working-age adults with at least four-year degrees, and keeping and attracting those who possess those sheepskins.
We’ll need a lot more of these highly educated workers to keep from losing our edge in the knowledge sector of the auto industry to other states not content to just pick off our auto plants.
“You can’t build that overnight,” Dziczek said about places that would like to steal Michigan’s automotive brainpower. “But it doesn’t mean it’s a birthright, either.”
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